This would be above the 8% price increase in the first quarter of the year as cost pressures began to intensify. Reuters has the details: “In terms of prices and volumes, I think we are in an uncharted area,” CEO Alan Jope said in a call for profits. “While we are fully aware of the pressure on consumers, we believe that raising prices in response to this extreme pressure on commodity costs is the right thing to do.” Analysts said prices were going to rise. Unilever’s full-year cost will ‘quadruple compared to a year ago. That’s why the pricing has to be so high and that’s why the price will go so much higher, “said Warren Ackerman of Barclays. “This is not the top.” “The concern is what will happen to the volumes when prices rise further?” In the first quarter, Unilever raised prices further in Latin America – by 16.4% – and in other emerging markets. As noted in the introduction, Unilever now expects its input cost inflation to reach 2.7 billion euros in July-December, a jump of 1.2 billion euros from its previous forecast. The rise in oil, cereals, other agricultural expenditures and fertilizers since the invasion of Ukraine has affected many manufacturers of consumer goods. Unilever, whose brands also include Knoor stock cubes, Hellmann mayonnaise and Magnum ice cream, is clearly on display. And while it raised prices by more than 8% in the first quarter of the year, sales rose 7.3% after falling 1% in volume as some customers turned to cheaper branding options. Updated at 10.23 BST Helen Davidson In China, authorities have said they are fighting rising prices as food shortages due to the lockdown in Shanghai continue and fears in Beijing are causing supermarkets to flee. It comes as social media platforms shut down the account of a high-profile critic of the government’s insistence on releasing a traditional Chinese medicine to millions of residents. On Wednesday, the Ministry of Public Safety pledged that any people taking advantage of epidemics to make a profit would be dealt with severely, with fines of up to 3 million yuan (£ 363,400). In Shanghai, a man faced administrative punishment for “fabricating and disseminating price increase information and disrupting purchase price orders.” The man was accused of buying products and reselling them online at prices increased by up to 360%. Another was accused of renting someone else’s business license and selling products and food on the Internet at inflated prices, making a profit of $ 230,000 (180 180,000). Last month, Shanghai market watchdogs said they had already issued about 20,000 price warning letters. More here: The sudden rise in Sweden’s interest rates could be a sign that the European Central Bank will soon raise its own interest rates from the current record low, experts say: Is the rise of the Riksbank the biggest sign that the ECB intends to take off already in June? – AndreasStenoLarsen (@AndreasSteno) 28 April 2022 Ima Sammani, senior FX analyst at Monex Europe, says inflation outlook has deteriorated in Sweden (as in the UK!): Today marks a critical day in the history of the Riksbank, as the central bank, which left the negative interest rate area only in December 2019, began its first interest rate hike since the pandemic. While timing the first rate hike in this environment was a challenge for all central banks in the German mark, it was even more difficult for Riksbank given its recent failed experiment with negative interest rates. The last thing the central bank wants to do is raise interest rates too early and risk re-entering negative territory. However, with inflation soaring in recent months and many Riksbank policymakers, including Governor Ingves, voicing concerns about the prospects for inflation and easing policy, expectations for today’s meeting have risen. Rising prices for everything from detergents to food are hurting consumers hard, and Unilever expects things to get worse as the year progresses, explains Laura Hoy, Equity Analyst at Hargreaves Lansdown: Here is her view on the results of the morning: The already increased prices of the group over 8% at the expense of volumes, but more increases are on the agenda as inflation continues to bite. We seem to be willing to pay more for the things we lost in the lockdown, like going out for ice cream, but beyond that, Unilever consumers are withdrawing as their wallets are squeezed. This is expected to reduce profit margins, as the group tries to find a balance between covering rising input costs and preventing customers from abandoning branded products altogether. Consumers are becoming more comfortable with private label brands and generic replacements will start to look much more acceptable as the pressure on household budgets continues to increase. This is bad news for companies like Unilever, which rely on consumer familiarity and trust to charge a premium for their products. At the moment, it seems that the compensation between volume and price is working, but this will not last forever. In addition, it opens the door to private labels and proprietary brands pushing long-term consumers. “If they are happy with their exchange, they may never return, even if they can afford it.”
Sainsbury’s: Customers watch every penny
Sainbury CEO Simon Roberts says customers are starting to “see every penny” as the cost of living rises. Speaking to reporters after the results this morning, Roberts said: “It’s early, the first month with (higher) fuel bills falling… “But we can see the first signs of customers being a little more careful, watching every penny, every pound.” Energy bills soared this month as the 54% price cap was lifted. Other bills also increased, such as municipal taxes and telecommunications bills. Sweden’s central bank has raised interest rates unexpectedly, in another sign that policymakers are worried about global inflationary pressures. Riksbank raised its key lending rate from zero to 0.25% and indicated it could raise interest rates two or three times this year. He says he has acted to prevent the rise in high inflation in prices and the setting of wages, having reached 6.1%, the highest level since the 1990s. The rise in inflation last year was largely due to the sharp rise in energy prices. But since the turn of the year, energy-free inflation has also risen rapidly and was significantly higher than the Riksbank forecast in February. The results show that the rise is now wide and the prices of goods and food as well as services are rising unusually fast. Ik Riksbank unexpectedly raises interest rates by 25 basis points. You will not be surprised if they have talked to their ECB counterparts and they know something. It increases the likelihood that the ECB will start operating in early June (rather than July). Europe must quickly make dry powder for the next impending recession $ SEK $ EUR pic.twitter.com/gEjwqOPdQ7 – Viraj Patel (@VPatelFX) 28 April 2022 Updated at 09.47 BST European stock markets rallied at the beginning of trading, as the best of the expected results from the owner of Facebook Meta reassure investors. In London, the FTSE 100 jumped 60 points, or 0.8%, to 7485 as it continued to recover from Monday’s recession as fears about the global economy hit equities. Standard Chartered banking group is Footsie’s leading rise, rising 12% after exceeding forecasts with a 6% increase in pre-tax profits. Across Europe, the German DAX and the French CAC are both 1.8% higher. Meta shares rose 18% in pre-market trading, although it lost its earnings forecast last night after reversing its decline in daily active users. Victoria Scholar, head of investment at interactive investor says, “European markets have opened up in the green, with positive momentum being transferred from the overnight meeting in Asia. Corporate reports drive prices with a lot of profits in the US and Europe. The FTSE 100 is pushing higher, approaching resistance at 7,500 points raised by Standard Chartered shares trading in double digits. However, part of this positivity is offset by the disappointing results of Sainsburys, which is withering to the bottom of the British index. And in Meta: Once a tech industry favorite, Meta fell out of favor with investors, frightened by rising inflation and interest rates as well as the disappointing February quarterly card. Even after the sharp drop in the February gap, price action continued to see the stock pushing down. Updated at 09.24 BST
Brexit explains 80% of inflation in the UK, says Posen
Brexit is also a key driver of rising inflation, according to Adam Posen, a former Bank of England policy maker. Posen warned yesterday that much of Britain’s inflation problem stems from Brexit. The former MPC member, who now heads the Peterson Institute for International Economics in Washington, D.C., also said he would vote in favor of raising interest rates by half a point to curb rising prices. Bloomberg has the details: “We see a very large gap between US inflation and inflation in Europe – the UK is coming to a halt,” Posen told a conference hosted by the UK on a Changing Europe research group. “You have seen a huge drop in migrant labor. When looking at macroeconomic factors, it is very difficult to see anything other than labor market issues. “It really seems that Brexit should play a disproportionate role in explaining inflation.” British companies have been warning of labor shortages for many months, with vacancies plummeting to more than a million in record highs. The UK Government is going to announce a fourth delay in the physical checks on fresh food imported from the European Union later today, having continued to strive to acquire the necessary technology or …
